PPF Telecom Group 1H2020 results - 26 August 2020
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26 August 2020
PPF Telecom Group
1H2020 results
1
Disclaimer
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2
Meet the presenters
Jan Tomaník Lukáš Kubesa
Investment manager of PPF Group Financial Manager of PPF Telecom Group
9 years experience in telco M&A 4 years experience in telco, CETIN and PPF
11 years in finance
• Acquisition of Telenor CEE • Financial Manager of PPF Telecom Group (since 2018)
• Structural separation of O2 and CETIN and subsequent refinancing • Head of Financial reporting of CETIN (2016-2018)
• Acquisition of Telefónica O2 CR • Senior financial reporting specialist at Raiffeisenbank CZ (2012-2016)
• Czech 4th mobile operator project • Senior Audit Associate at PwC (2009-2012)
3
Introduction to PPF Group and PPF Telecom Group
PPF Group Overview 26 August 2020 4PPF Group is an international investment group
founded in 1991 in Czech Republic
37,9 billion
48.6 billionEUR
EUR 7,38.8
billion EUREUR
billion 0,6 billion
0.9EURbillion EUR 160 22
ths.
totalassets
total assets*
1 equity*
equity1 net income* net income1 countries
employees 1
PPF GROUP OPERATES IN 24 COUNTRIES EQUITY BY SEGMENT1,2
Other
29% Financial
Services
40%
Machinery
4%
Real Estate
Diverse business activities encompassing banking and financial services, 10% Telecommunications
telecommunications, biotechnology, insurance, real estate, and agriculture 17%
SHAREHOLDERS
Petr Kellner Ladislav Bartoníček Jean-Pascal Duvieusart
Founder and majority shareholder CEO of PPF Telecom Group CEO of Home Credit, Member of Board of
Directors of PPF Real Estate
98.93 % 0.535 % 0.535 %
[1] Assets as of 31 December 2019, equity attributable to owners of the parent as of 31 December 2019, net income attributable to owners of the parent for the period of 12 months up to 31 December 2019,
number of employees as of 31 December 2019
[2] Excluding Unallocated segment
Source: PPF Group Financial Statements for FY2019
5PPF Telecom Group: Key credit highlights
Market leading businesses with strong brand recognition, high quality assets and market share4 subscribers
1 superior network coverage PPF Telecom
• Stable market leading positions across six European markets
• #1 to #2 positions in most retail markets by both revenue and customer share
Group
• Quality brand positioning in all markets in 1H 2020 32% 17.0m3
• High quality mobile networks with full coverage
Czechia
• National fixed network infrastructure in Czech Republic 11
35%
2
5.9m
2
mobile
+ fixed
2 Stable markets with positive long-term trends supporting growth
Slovakia 3
• Predictable regulatory environment in all markets 27% 2.2m
mobile
• Moderate intensity of the competition with stable market shares and ARPUs
• Growing demand for data across our footprint, further accelerated during COVID lockdown period
• Track record of moderate growth in all markets
Hungary 2
mobile 29% 3.0m
3 Diversified, strong and stable cash flow generation
• EBITDA generation well diversified across six independent streams
• Group cash conversion rate historically around 50%5 Bulgaria 1
• Strong interest coverage ratios at consolidated and at PPF Telecom Group (stand-alone) level mobile 35% 2.9m
Credit strengths confirmed by crossover rating. Three Eurobond issues since 2019
Serbia 1
• BB+ Standard&Poor’s • 550m 7Y Eurobond due 2026 mobile 35% 2.7m
• Ba1 Moody’s • 600m 5Y Eurobond due 2025
• BBB- FitchRatings • 600m 4Y Eurobond due 2024
Montenegro 1
[1] O2 CR #1 position in mobile and fixed markets combined; #1 position in mobile market shared with T-Mobile mobile 33% 0.3m
[2] O2 CR Market share and subscribers number reported for mobile segment only; O2 CR subscribers reported using 13 months active criterion,
O2 SR and Telenor 3 months active
[3] Including O2 Group’s M2M subscribers; 15.9m excluding M2M subscribers Source: Company data, Analysys Mason
[4] Market shares are for 1Q2020; market share for the CEE region is calculated as weighted average of mobile revenue market share for all countries where PPF Telecom Group is active 6
[5] Cash conversion = Free cash flow / EBITDA; based on unaudited pro forma condensed consolidated financial information for 2017-2018 and Annual Report 2019Regional mobile market overview
All markets have three main operators
7Strong and stable position in six markets
1
Market leader in CEE region excluding Poland with 32% market share
2
Czechia Slovakia
2
1 3
PPF Telecom Group
▪ 5,910k mobile subs3
mobile+fixed
in 1H 2020 ▪ 2,157k mobile subs3
mobile
▪ 35% market share1 ▪ 27% market share1
▪ €9.9 ARPU4 26% ▪ €10.0 ARPU4 8%
▪ 845k FBB subs
EBITDA share EBITDA share
Czechia Hungary
infrastructure market position
1 2
Telenor CEE
infrastructure mobile
▪ 1.2m households ▪ 2,997k mobile subs3
connected 23%
▪ 29% market share1
▪ >50% market share ▪ €12.0 ARPU4 15%
▪ >6k mobile sites
EBITDA share EBITDA share
Montenegro Serbia Bulgaria
1 1 1
Telenor CEE Telenor CEE Telenor CEE
mobile mobile mobile
▪ 315k mobile subs3 ▪ 2,669k mobile subs3 ▪ 2,937k mobile subs3
14% 14% 14%
▪ 33% market share1 ▪ 35% market share1 ▪ 35% market share1
▪ €8.8 ARPU4 ▪ €8.9 ARPU4 ▪ €8.7 ARPU4
EBITDA share5 EBITDA share5 EBITDA share
Source: Company data, Analysys Mason; EBITDA shares and other KPI’s based on 1H2020 results
[1] Market share for the CEE region is calculated as weighted average of mobile revenue market share for countries where PPF Telecom Group is active;
the source for market shares is Analysys Mason, August 2020; market shares are at the end of 1Q2020 [5] EBITDA share for Serbia and Montenegro are reported on a consolidated basis
[2] #1 position in mobile and fixed markets combined; #1 position in mobile market shared with T-Mobile
[3] O2 CR subscribers reported using 13 months active criterion, O2 SR and Telenor 3 months active; O2 including M2M subscribers, Telenor excluding M2M subscribers
8
[4] ARPU is calculated according to IAS 18; O2 CZ ARPU is calculated by PPF Telecom Group using publicly available data according to IFRS15Diversification of PPF Telecom Group
Regionally balanced portfolio with half of the business in Czechia
MOBILE SUBSCRIBERS BY SEGMENT GEOGRAPHICAL DISTRIBUTION OF REVENUES
in 000’s 1H2020 in EURm 1H2020
Czech Republic 1 Czech Republic 2
212
2,984 14%
17% Slovakia1 Slovakia
5,910
Total mobile Total 190 741
35%
subscribers 2,937 Hungary consolidated 13% 48% Hungary
17.0m1 17% revenues
EUR 1,545m
Bulgaria 250 Bulgaria
2,157 16%
2,997 13% 138
18% Serbia + Serbia +
9%
Montenegro Montenegro
GEOGRAPHICAL DISTRIBUTION OF EBITDA EBITDA BY TYPE OF BUSINESS
in EURm 1H2020 in EURm 1H2020
CETIN
Czech Republic mobile+fixed
97 infrastructure
14% 160 wholesale
Slovakia
334 22%
Total
96 48% CETIN
consolidated
14% Hungary
Telenor CEE 317
EBITDA mobile services O2 Group
44%
EUR 700m to end users
Telenor CEE
110 Bulgaria 242
16% 34%
58
Serbia + O2
8%
Montenegro mobile+fixed services
to end users
[1] Including O2 Group’s M2M subscribers; 15.9m excluding M2M subscribers 9
[2] O2 CZ + CETIN including international transit and excluding intercompany revenuesA track record of commitment to telco industry
Telenor CEE
2012 2013 2014 2015 2016 2017 2018
PPF aiming to PPF completes the Structural separation of CETIN receives two ratings: PPF Arena 1 signs
establish 4th acquisition of 66% O2 infrastructure and Baa2 by Moody’s Telenor CEE
mobile operator in in Telefonica O2 CR establishment of CETIN BBB by Fitch acquisition and
Czech Republic (incl. subsidiary in SK) establishes
from Spanish Telefonica CETIN issues debut a permanent
(later raised to 84.06%) dual-currency Eurobond financing platform
2019 Jan Feb Mar Oct Nov Dec
PPF Arena 1 receives 25% stake EUR 500m 5yr Eurobond
BB+/Ba1/BBB- ratings in Telenor Hungary to partially refinance
by S&P, Moody’s, Fitch sold to a strategic partner the acquisition debt
EUR 550m 7yr Eurobond
to partially refinance the acquisition debt
2020 Jan Feb Mar Apr May June July Aug
EUR 100m 5yr tap Name changed to 5G spectrum EUR 500m 4yr Eurobond Structural separation of
PPF Telecom Group acquired in Hungary for general corporate Telenor in Hungary,
purposes Bulgaria and Serbia
EUR 100m loan
EUR 100m 4yr tap CETIN's EUR 625m
to finance spectrum
committed credit
acquisition in Hungary
O2 term loan refinanced facility, undrawn
Source: Company data 10PPF Telecom Group structure
1
A cluster of market-leading telecom assets
PPF Telecom Group B.V.
BB+/Ba1/BBB-
• Term loan EUR 1.03bn, due 2024 of
• Bond EUR 550m, due 2026, 3.125% p.a.
• Bond EUR 600m, due 2025, 2.125% p.a. 66% Group
debt
• Bond EUR 600m, due 2024, 3.500% p.a.
net leverage pro-forma net leverage7
Consolidated debt EUR 4.2bn 2.31x 30 June 2020 2.76x 26 Aug 2020 (post-dividend)
34% of 6 of of
Group
EBITDA
Telenor CEE 43% Group
EBITDA 23%
Group
EBITDA
• Term loan EUR 223m, due 2025 of
• 5Y Amortising term loan EUR 100m, due • Bond EUR 625m, due 2021, 1.423% p.a. of
• Schuldschein EUR 291m, due 2022/24/26 13% Group
debt 2025 2% +undrawn EUR 625m loan, due 2023 19% Group
debt
• Bond EUR 182m, due 2023, 1.25% p.a.
O2 Czech Republic 67.83%2 Telenor Hungary 75%5 CETIN Hungary CETIN 89.73%4
Mobile + Fixed services 83.58%3 PPF Group Mobile services Mobile infrastructure Telco infrastructure 100% PPF Group
-/Baa2/BBB
O2 Slovakia 100% Telenor Bulgaria 100% CETIN Bulgaria
Mobile services by O2 Czech Republic Mobile services Mobile infrastructure
Telenor Serbia 100% CETIN Serbia
Mobile services Mobile infrastructure
Montenegro 100%
Mobile services and infrastructure
Source: Company data
[1] The chart represents the simplified group structure to illustrate main segments within PPF Telecom Group B.V.
[2] Share in voting rights; the difference to 65.79% share in share capital is due to ownership of own shares by O2 Czech Republic which may not exercise voting rights
[3] PPF A3 B.V. and PPF Cyprus Management Ltd, entities of the PPF Group outside of the PPF Telecom Group, hold together an additional 15.27% ownership interest in O2 Czech Republic,
resulting in effective ownership interest of the PPF Group in O2 Czech Republic of 81.06% of share capital / 83.58% of voting rights
[4] PPF A3 B.V., an entity of the PPF Group outside of the PPF Telecom Group, owns the remaining 10.27% ownership interest in CETIN, resulting in an effective interest of the PPF Group in CETIN of 100.0%
[5] 25% stake owned by Antenna Hungária Zrt., the country’s leading state-owned telecommunications service provider, via TMT Hungary B.V. holding company
[6] Structural separation of Telenor in Hungary, Bulgaria and Serbia executed as of 1 July 2020, spinning off CETIN subsidiaries with telecommunications infrastructure
11
[7] Simplified calculation, using 30 June 2020 data decreased by the EUR 600m dividend paid in Aug 2020Business update and 1st half of 2020 financial results
12Key highlights of 1H 2020 results
Sound financial performance, investing to sustain growth
1 Stable markets with further potential 2 Structural separation of Telenor CEE
• Preserved overall stable competitive situation • Separation from Telenor executed on 2 July 2020
• Sustainable growth of mobile subscribers +0.5% YoY in 1H2020
• CETIN established in Hungary, Bulgaria and Serbia
• Share of contract clients reached 66% of total base, +2 p.p. YoY
• Building on the success of O2 CZ separation
• 5G spectrum auctions underway
Infrastructure:
17.0m • All changes within the perimeter of
PPF Telecom Group, not affecting
CZ
SK
HU
integrated
separated
mobile subscribers1
RS
+1.0% yoy its capital structure ME BG
contract subscribers
3 Revenue momentum 4 Growing earnings and free cash flows
• “More-for-more” services pricing evolution • Delivering on cost efficiency agenda
• Czech fixed subscribers momentum turnaround • Preparation of 5G rollout
• CETIN wholesale FBB subscriptions up +4.3% YoY
• 4G network capacity investments,
• Evaluation of FMC and Pay TV
IT modernisation
in Telenor CEE +1.1% +3.7%
domestic market2
EBITDA
revenue
y-o-y
y-o-y
Source: Company data
[1] Including O2 Group’s M2M subscribers; 15.9m excluding M2M subscribers 13
[2] Mobile, fixed and other services and HW sales on domestic markets, excluding international transit servicesCOVID 19 impact and outlook
Negligible impact so far, outlook is balanced mix of threats and opportunities
MARKET DEMAND FREE TELCO SERVICES FOR COMMUNITY
Government priority/ strategic infrastructure Unlimited data during lockdowns
Increased traffic during lockdowns Free entertainment, TV channels
Minor impact to gross adds - most shops open O2 RE:START tariff for SME
Free SMS for government
mobile voice traffic mobile data traffic
in Erl in GB broadcasts, volunteer helpers, free help lines
2020 2020
Geolocation for infection tracing
Free educational portals and libraries for closed schools
2019
2019
Payment terms extended for senior and disabled citizens
+19% +10% +8% +79% +66% +56%
yoy -1% +16% +6% yoy +59% +87% +60%
Jan Feb Mar Apr May Jun Jul Jan Feb Mar Apr May Jun Jul
OUTLOOK DONATIONS OF MEDICAL EQUIPMENT
Demand for telco services will grow EUR 75k donation for health workers
Measures to protect profitability and CF 15 intensive care beds, 52 infusion
• Opportunities in OPEX and CAPEX pumps and 15 monitors donated
• Focus on receivables collection 70k masks, smart phones
Lower purchasing power Hygiene packs for vulnerable families
Potential second wave PCs for centres for accommodation
Phones, tablets, and cards for students’ final exams
Free mobile data cards supporting digital education
Source: Company data 14Mobile network infrastructure separation project
Executed as of 2 July 2020 in Hungary, Bulgaria and Serbia
OBJECTIVES AND BENEFITS PPF TELCO OPERATING MODEL
• Sustainable model for the infrastructure separated from the O2 and Telenor CETIN
commercial companies, consistent across the region
• Clear management priorities NetCo vs. ComCo Telco services Network assets
• services to end users
• Potential for wholesaling infrastructure services
• sales and marketing
• Potential for partnerships incl. infrastructure sharing • spectrum ownership
• network core
• Synergies in development of the infrastructure across CETINs Network services
• OPEX and CAPEX savings operations, maintenance
MHz
core and constructions
• Ownership and maintenance of Telenor network assets
consolidated in CETINs
PPF Telecom Group B.V. NL
PPF Telco B.V. NL PPF TMT Bidco 1 B.V. NL CETIN Group B.V. NL
O2 CZ 68% Telenor HU 75% CETIN HU 90% CETIN CZ
O2 SK Telenor BG CETIN BG
NL – Netherlands
CZ – Czechia
Holding or financing company Telenor RS CETIN RS SK – Slovakia
HU – Hungary
Operating company - services to end users BG – Bulgaria
Telenor ME RS – Serbia
Operating company - wholesale infrastructure services ME – Montenegro
% PPF Telecom Group ownership share
15Mobile market commercial update
O2 Czech Republic and O2 Slovakia Telenor Hungary, Bulgaria, Serbia + Montenegro
MOBILE AND FIXED MOBILE
• Continuous growth of both Mobile and • Continuous focus on customer base
Fixed base via successful bundling value growth driven by pre2post
strategy migration and growing data consumption
• Channel transformation delivering higher • Successful channel adjustments
productivity across retail, tele-sales and shifting transactions to tele-sales and
online despite of COVID19 on-line addressing COVID19 pandemic
TV AND OTHER SERVICES COMPLEMENTARY EQUIPMENT AND SERVICES
• Continuous TV growth reaching #1 in IPTV market position • Telenor CEE focusing on lunching new services such as Car
fleet Drivey, Digital travel insurance or bundling wearables on
• Network security product reaching already 100k subs installments
NETWORK NETWORK
• First commercial launch of 5G in Czech republic • Continued to maintain strong network perception confirmed
by reputable benchmarks
16Mobile revenue market shares
Telenor CEE and O2 maintain mobile revenue market shares
CZECHIA SLOVAKIA HUNGARY
25% 25% 27% 28% 28% 28% 24% 24% 24% 23% 23% 25%
42% 40% 37% 36% 35% 34%
37% 37% 37% 36% 36% 37% 49% 49% 49% 49% 49% 46%
34% 35% 34% 34% 34% 35%
38% 37% 36% 35% 35% 35% 27% 27% 28% 27% 28% 27% 27% 28% 28% 29%
24% 24% Telenor CEE
2015 2016 2017 2018 2019 1Q 2015 2016 2017 2018 2019 1Q 2015 2016 2017 2018 2019 1Q
2020 2020 2020
O2 Czech Republic T-Mobile Vodafone O2 Slovakia Telekom - T-Mobile Orange Telenor Hungary Magyar Telekom - T-Mobile Vodafone
BULGARIA SERBIA MONTENEGRO
20% 21% 22% 25% 28% 30% 24% 22% 24% 27%
36% 34% 35% 34% 33% 32% 31% 33%
39% 39% 39% 37% 30% 32% 33% 33%
25% 25% 26% 27% 30% 31% 35% 35% 32% 34%
37% 38% 38% 38% 36% 35% 41% 40% 39% 38% 38% 46% 46% 43% 40% 37%
Telenor CEE 35% Telenor CEE 33% Telenor CEE
2015 2016 2017 2018 2019 1Q 2015 2016 2017 2018 2019 1Q 2015 2016 2017 2018 2019 1Q
2020 2020 2020
Telenor Bulgaria Vivacom A1 – Telekom Austria Telenor Serbia mts – Telekom Srbija vip – Telekom Austria Telenor Montenegro T-Mobile m:tel – Telekom Srbija
Source: Analysys Mason, August 2020
17Mobile market dynamics
Stable subscriber base with ongoing prepaid to postpaid migration
O2 CZECH REPUBLIC O2 SLOVAKIA TELENOR HUNGARY
in millions +5.6% +2.0% in millions +3.7% +0.7% in millions -0.9% +2.6%
YoY total YoY contract YoY total YoY contract YoY total YoY contract
5.60 5.62 5.86 5.86 5.91 incl. M2M 2.08 2.12 2.15 2.15 2.16 incl. M2M 3.02 3.03 3.03 3.02 3.00
5.17 5.18 5.21 5.20 5.19 excl. M2M 1.79 1.80 1.81 1.79 1.77 excl. M2M
0.43 0.44 0.64 0.66 0.72 0.29 0.31 0.34 0.36 0.39
1.08 1.07 1.05 1.02 1.00
1.97 1.96 1.97 1.95 1.93 M2M M2M prepaid
0.75 0.76 0.76 0.74 0.72 64% 67%
62% 63%
prepaid 58% 59% prepaid contract
3.25 3.26 3.26 contract 1.05 contract 1.95 1.97 1.98 1.99 2.00
3.20 3.22 1.04 1.05 1.05 1.05
2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q
2019 2019 2019 2020 2020 2019 2019 2019 2020 2020 2019 2019 2019 2020 2020
13 months active criterion 3 months active criterion 3 months active criterion, excluding M2M clients
TELENOR BULGARIA TELENOR SERBIA TELENOR MONTENEGRO
in millions -3.4% -1.5% in millions -4.6% +1.2% in millions -12% +1.0%
YoY total YoY contract YoY total YoY contract YoY total YoY contract
0.43
3.04 3.08 3.01 2.97 2.94 2.80 2.88 2.81 2.76 0.36 0.35
2.67 0.33 0.32
0.61 0.65 0.58 0.56 0.55
80% 81%
prepaid 1.15 1.21 1.13 1.09 1.00 prepaid 0.27 prepaid
0.20 0.19 0.17 0.15
59% 63%
contract contract contract
2.43 2.42 2.42 2.41 2.39 45% 51%
1.65 1.67 1.68 1.67 1.67
0.16 0.16 0.16 0.16 0.16
2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q
2019 2019 2019 2020 2020 2019 2019 2019 2020 2020 2019 2019 2019 2020 2020
3 months active criterion, excluding M2M clients 3 months active criterion, excluding M2M clients 3 months active criterion, excluding M2M clients
Source: Company data % share of contract subscribers in the base, excluding M2M 18Mobile ARPU
Generally stable ARPU across our footprint
O2 CZECH REPUBLIC1 O2 SLOVAKIA TELENOR HUNGARY
-4.4% YoY estimate1 EUR -3.4% YoY blended EUR -4.5% YoY blended EUR
in EUR in EUR
in EUR
+0.6% YoY estimate1 CZK +3.9% YoY blended HUF
23.8 24.2 23.8 23.5 22.5
10.6 10.8 10.9 10.7 10.1 10.4 10.6 10.3 10.0 10.0
12.3 12.6 12.4 12.2 11.7
4.0 4.1 3.9 3.5 3.3
2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q
2019 2019 2019 2020 2020 2019 2019 2019 2020 2020 2019 2019 2019 2020 2020
revenue/subscribers blended B2C voice contract prepaid blended
O2 Czech Republic is not reporting ARPU O2 Slovakia is reporting only blended ARPU
TELENOR BULGARIA TELENOR SERBIA TELENOR MONTENEGRO
+4.9% YoY blended EUR in EUR +5.3% YoY blended EUR -12% YoY blended EUR
in EUR in EUR
+4.9% YoY blended BGN +4.9% YoY blended RSD
16.0 13.4 13.9 13.6 13.6 13.7 15.6
15.1 14.6 14.1 13.8
11.1 11.5 11.5 11.6 11.6
12.0 8.6 8.9 8.7 8.7 9.0 10.1 9.7
8.3 8.5 8.5 8.6 8.7 7.9 8.8 8.9
8.0 5.5 5.5 4.2
3.6 4.0
3.1 3.3 3.0 2.8 3.0
3.1 3.2 2.9 2.7 2.9 4.0
2Q 3Q 4Q 1Q 2Q
0.0
2Q 3Q 4Q 1Q 2Q 2019 2019 2019 2020 2020
2Q 3Q 4Q 1Q 2Q
2019 2019 2019 2020 2020 2019 2019 2019 2020 2020
B2C voice contract prepaid blended B2C voice contract prepaid blended B2C voice contract prepaid blended
Source: O2 published figures, Telenor internal sources % YoY growth in EUR % YoY growth in local currency
[1] O2 Czech Republic stopped reporting ARPU from 2Q2019. To approximate this metric, revenue/user is calculated as mobile service revenue (excluding inbound roaming and M2M revenues) divided by the average 19
number of active mobile subscribers (excluding M2M). O2 Slovakia calculation of ARPU excludes inbound roaming and M2M revenues (undisclosed); Telenor calculation excludes inbound roaming and M2M revenuesFixed services in the Czech Republic
CETIN upgraded its network, resumed growth and supported growth of O2
CETIN WHOLESALE FBB SUBSCRIPTIONS O2 CR TECHNOLOGY-AGNOSTIC BROADBAND1 SUBSCRIBERS
in '000s 4.3% in '000s 2.8%
YoY YoY
918 927 936 948 958
822 830 835 840 845
2Q 3Q 4Q 1Q 2Q 2Q 3Q 4Q 1Q 2Q
2019 2019 2019 2020 2020 2019 2019 2019 2020 2020
[1] O2 CR definition: Cable (ADSL, VDSL, fibre) and wireless (4G LTE, WTTx)
Source: CETIN Source: O2 quarterly results
CETIN FIXED NETWORK MODERNISATION O2 CR PAY TV SUBSCRIBERS2
• Upgrading xDSL via FFTc/FTTb/FTTh
in '000s 24.3%
+52 p.p. YoY
30% 65% 82% 50+ Mbps lines
30% 36%
443 459 476
60% 100+ Mbps 383 406
38% 29%
22% 50 Mbps
20% 2Q 3Q 4Q 1Q 2Q
32% 9% 20 Mbps
15% 9% ADSL 2019 2019 2019 2020 2020
2015 2018 2019 [2] O2 CR definitions: IPTV and OTT, incl. "Multi" service (second set-top-box) until 3Q 2019.
Since 4Q 2019 incl. prepaid O2 TV Sport Pack online and O2 TV HBO and Sport Pack packages
Source: CETIN internal data 20
Source: O2 quarterly results1H2020 consolidated results at a glance
Sound results, all businesses contributed to the growth of group’s earnings
REVENUES BY SEGMENT REVENUES EBITDA
EURm 1H2019 1H2020 1H2020 2019
yoy yoy
Consolidated EURm Consolidated EURm
1,507 1,545 2.5% 0.1%
revenues1 1,545
1,507 +2.5% 675 +3.7% 700
O2 Group 747 742 -0.7% 2.5%
CETIN excl. transit 228 229 0.5% 2.5%
International
118 YoY 137 transit IFRS 16
Telenor CEE 655 666 1.7% 2.4% 50 YoY 52
impact
o/w Hungary 255 250 -2.0% 1.9% Domestic
revenues
o/w Bulgaria 184 190 3.3% 2.3% 1,393 +1.1% 1,408 +3.7%
625 648
o/w Serbia + Montenegro 200 212 6.0% 3.5%
Eliminations -241 -229 -5.0% 8.6%
Consolid. revenues 1H2019 1H2020 1H2019 1H2020
1,393 1,408 1.1% 1.5%
excl. transit
EBITDA BY SEGMENT CAPEX2 FREE CASH FLOWS AFTER LEASES3
EURm 1H2019 1H2020 1H2020 2019
EURm EURm
yoy yoy
Free Cash Flows before spectrum CAPEX
EBITDA 675 700 3.7% 14% 384
+60%
254 301 +28%
O2 Group 237 242 2.1% 13%
CETIN 163 160 -1.8% 13% YoY Spectrum
159 100 Spectrum 100
YoY CAPEX
31
Telenor CEE 275 303 10% 16% 31
o/w Hungary 104 110 5.8% 16%
+20% 154 270 +5.2% 284
128
o/w Bulgaria 87 96 10% 14%
o/w Serbia + Montenegro 83 97 17% 18%
1H2019 1H2020 1H2019 1H2020
EBITDA
625 648 3.7% 6.4%
excl. IFRS 16 impact
Source: Telenor CEE internal data, CETIN Annual report 2019,
PPF Telecom Group audited consolidated financial statements for the year ended 31 December 2019, 2017 and 2018 based on unaudited pro forma condensed consolidated financial information,
[1] Revenues + other income 21
[2] CAPEX represents additions to property, plant and equipment and intangible assets
[3] Free cash flows represent Net cash from operating activities less cash used for Purchase of PPE and intangible assets and including Proceeds from disposals of PPE and intangible assets and including Lease paymentsKey credit metrics
Majority of the consolidated debt is held at PPF Telecom Group level
NOMINAL FINANCIAL DEBT1 PROFILE AS OF 30-JUN-2020 CONSOLIDATED NET LEVERAGE RATIO5 AS OF 30-JUN-2020
in EURm O2 CR
in EURm
291 20 3.20x Gross leverage
O2 553m 223
CETIN 807m PPF Telecom Group
Telenor Hungary 100m 1,932 2,020 1,184
PPF Telecom Group 2,783m 600 2.31x Net leverage
FINANCIAL DEBT 4,243m
CETIN 20 O2 CR
20 4,229
182
600 36 3,045 3,045
1,033
625 O2 CR 625 550 1,321
32 262
20 20
2020 2021 2022 2023 2024 2025 2026 Financial debt 2 Cash Net debt 3 EBITDA 4
Term loans Bonds Schuldscheins Amortising term loan TNR HU
Financial debt Cash EBITDA
• EUR 625m CETIN liquidity back-up facility, signed 31 July 2020, undrawn and committed • In Aug 2020, PPF Telecom Group has paid a EUR 600m dividend, driving the pro-forma net
for refinancing of the 1.423% EUR 625m Dec 2021 bond. leverage to 2.76x
• EUR 1,033m PPF Telecom Group bank loan can be prepaid with no prepayment fee
BONDS 2020 LEVERAGE5 DYNAMICS
CETIN - investment grade Baa2 / BBB (Moody’s / FitchRatings) 3.2x financial policy threshold for net leverage excl. IFRS 16 impact
• Eurobond EUR 625m, 5 years, due Dec 2021, 1.423% p.a. 3.09x
3.20x
+ undrawn EUR 625m facility, due Dec 2023, committed for refinancing 2.76x
26-Aug-2020
pro-forma6
• Eurobond CZK 4,866m (EUR 192m), 7 years, due Dec 2023, 1.235% p.a.
2.48x
2.31x
PPF Telecom Group - crossover rating BB+ / Ba1 / BBB- (S&P/ M / F)
• Eurobond EUR 550m, 7 years, due Mar 2026, 3.125% p.a.
• Eurobond EUR 600m, 5 years, due Jan 2025, 2.125% p.a.
• Eurobond EUR 600m, 4 years, due May 2024, 3.500% p.a. 31 Dec 2019 30-Jun-20
Gross leverage Net leverage
Source: O2 published results, PPF Telecom Group internal data, PPF Telecom Group audited consolidated financial statements for the year ended 31 December 2019 and PPF Telecom Group 1H2020 financial statements
[1] Outstanding principal amounts, excluding RCF and overdraft facilities; CZK-denominated debt converted with EUR/CZK rate of 26.74
[2] Financial debt = amount due to banks and debt securities issued, including amortised legal fees/bank fees and accrued interest, excluding IFRS 16 impact
[3] Net debt = Gross debt (excluding IFRS 16 impact) less Cash and cash equivalents and other highly liquid assets
[4] EBITDA for the last twelve months preceding 30 June 2020, excluding IFRS 16 impact 22
[5] Consolidated net leverage ratio = consolidated Gross Debt less Cash and cash equivalents / EBITDA for the last twelve months preceding 30 June 2020, excluding IFRS 16 impact
[6] Simplified calculation, using 30 June 2020 data decreased by the EUR 600m dividend paid in Aug 2020Appendix - Key financial metrics
EURm 2018 2019 2019 yoy 1H2019 1H2020 1H2020 yoy
Consolidated revenues 3,165 3,170 0.1% 1,507 1,545 2.5%
O2 Group 1,497 1,534 2.5% 747 742 -0.7%
CETIN excl. transit 460 471 2.5% 228 229 0.5%
Telenor CEE 1,343 1,375 2.4% 655 666 1.7%
o/w Hungary 517 527 1.9% 255 250 -2.0%
o/w Bulgaria 375 384 2.3% 184 190 3.3%
o/w Serbia + Montenegro 415 430 3.5% 200 212 6.0%
Eliminations -453 -492 8.6% -241 -229 -5.0%
CETIN transit revenues 319 282 -12% 118 137 16%
Cons. revenues (excl. transit) 2,846 2,888 1.5% 1,393 1,408 1.1%
2018 2019 1H2019 1H2020
EBITDA 1,220 1,397 14% 675 700 3.7% EBITDA margins 39% 44% 45% 45%
O2 Group 433 492 13% 237 242 2.1% O2 Group 29% 32% 32% 33%
CETIN 295 333 13% 163 160 -1.8% CETIN 64% 71% 71% 70%
Telenor CEE 493 573 16% 275 303 10% Telenor CEE 37% 42% 42% 45%
o/w Hungary 179 208 16% 104 110 5.8% o/w Hungary 35% 39% 41% 44%
o/w Bulgaria 158 180 14% 87 96 10% o/w Bulgaria 42% 47% 47% 51%
o/w Serbia + Montenegro 156 184 18% 83 97 17% o/w Serbia + Montenegro 37% 43% 42% 46%
EBITDA excl. IFRS 16 impact 1,220 1,298 6.4% 625 648 3.7% EBITDA margins 39% 41% 41% 42%
CAPEX 423 392 -7.5% 159 254 60% CAPEX / revenues 13% 12% 11% 16%
O2 Group 172 95 -45% 41 39 -4.9% O2 Group 11% 6.2% 5.5% 5.3%
CETIN 158 161 2.1% 55 63 15% CETIN 34% 34% 24% 27%
Telenor CEE 94 136 45% 63 152 141% Telenor CEE 7.0% 9.9% 9.6% 23%
o/w Hungary 34 62 83% 40 122 205% o/w Hungary 6.6% 12% 16% 49%
o/w Bulgaria 23 28 20% 11 13 18% o/w Bulgaria 6.1% 7.2% 6.0% 6.8%
o/w Serbia + Montenegro 37 46 26% 12 17 42% o/w Serbia+ Montenegro 8.8% 11% 6.0% 8.0%
EBITDA less Capex 797 1,005 26% 516 446 -14%
O2 Group 261 397 52% 196 203 3.6%
CETIN 138 172 25% 108 97 -10%
Telenor CEE 399 437 9.5% 212 151 -29%
o/w Hungary 145 146 0.5% 64 -12 -119%
o/w Bulgaria 135 152 13% 76 83 9.2%
o/w Serbia + Montenegro 119 138 16% 71 80 13%
Free Cash Flow 598 827 38% 319 344 7.8% FCF Conversion rate 49% 59% 47% 49%
FCF after lease payments 598 727 22% 270 284 5.2% FCF Conv. rate after lease payments 49% 56% 43% 44%
Source: 2018 figures are based on unaudited pro forma condensed consolidated financial information; CETIN revenues from international voice transit service were provided by Group’s internal reporting and will be
published in CETIN’s annual reports; these revenues contribute only a minimum amount of gross profit/EBITDA
2018 figures are excluding the effects of IFRS 16; 2019 figures are including the effects of IFRS 16 adoption, using the modified retrospective method
23
Free cash flows represent Net cash from operating activities less cash used for Purchase of PPE and intangible assets and including Proceeds from disposals of PPE and intangible assetsAppendix - Group balance sheet highlights
New bond issues further diversified the Group’s funding sources
in EURm 31 Dec 2019 30 Jun 2020 diff.
Non-current assets 6,643 6,324 -4.8%
• o/w property, plant & equip. + intangible 4,365 4,150 -4.9%
Current assets 1,572 1,899 +21%
• o/w cash & other highly liquid assets 795 1,184 +49% 600m dividend paid in Aug ’20; the remainder held
for spectrum auctions and as liquidity reserve
TOTAL ASSETS 8,215 8,222 +0.1%
EQUITY 2,261 2,209 -2.3%
Liabilities 5,954 6,011 +1.0%
• o/w bonds 1,869 2,564 +37% +700m PPF Telecom Group Eurobonds
o/w debt to banks 2,139 1,665 -22% -545m net repayment of term loan,
+100m Telenor HU spectrum financing
24
Source: PPF Telecom Group audited consolidated financial statements for the year ended 30 June 2020Appendix - Spectrum allocation
band size up to: 2 x 30 MHz 2 x 30 MHz 2 x 35 MHz 2 x 115 MHz 2 x 60 MHz 2 x 80 MHz 70 MHz 2 x 100 MHz 190 MHz 200 MHz
FDD TDD FDD TDD TDD
410 450 700 800 900 1 800 2 100 2 600 2 600 3 500 3 500 3 700
upcoming upcoming
2 x 10 MHz 2 x 10 MHz 2 x 27 MHz 2 x 19.8 MHz 2 x 20 MHz Vodafone 40 MHz Vodafone
Czechia 3 MHz Nordic 80 MHz Nordic
2 x 30 MHz 2 x 10 MHz 2 x 12.7 MHz 2 x 20 MHz 2 x 19.8 MHz 2 x 30 MHz 25 MHz T-Mobile 190 MHz
40 MHz PODA
O2 4 MHz 2 x 10 MHz 2 x 12.4 MHz 2 x 27.8 MHz 2 x 19.8 MHz 2 x 20 MHz 25 MHz O2 40 MHz O2
upcoming
Orange 2 x 10 MHz 2 x 4.6 MHz 2 x 8.9 MHz 2 x 20 MHz 2 x 30 MHz 2 x 35 MHz Slovanet 80 MHz regional
2 x 20 MHz
Slovakia T-Mobile
2 x 10 MHz 20 MHz 40 MHz 4ka
2 x 30 MHz 2 x 10 MHz 2 x 15 MHz 2 x 20 MHz 2 x 40 MHz 50 MHz
2 x 10.2 MHz 40 MHz Benestra
2 x 15.2 MHz
O2 2 x 10 MHz 2 x 20 MHz O2
2 x 10.2 MHz 2 x 15.8 MHz 2 x 45 MHz 20 MHz 40 MHz
new 2 x 15 MHz new new
2 x 10 MHz 2 x 10 MHz 2 x 11 MHz 2 x 15 MHz 2 x 20 MHz 2 x 20 MHz 25 MHz 120 MHz 50 MHz
Vodafone
Hungary 2 x 4.9 MHz 25 MHz 60 MHz
T-Mobile 2 x 10 MHz 2 x 10 MHz 2 x 12 MHz 2 x 25 MHz 2 x 30 MHz 120 MHz
2 x 25 MHz DIGI 20 MHz
Telenor 2 x 5 MHz 2 x 10 MHz 2 x 11.8 MHz 2 x 29.9 MHz 2 x 15 MHz 2 x 20 MHz 140 MHz
2 x 10 MHz
2 x 5 MHz Bulsatcom
A1 2 x 11.2 MHz 2 x 15 MHz
Bulgaria 2 x 15 MHz
2 x 15 MHz
Vivacom 2 x 11.2 MHz 2 x 15 MHz T.com
2 x 15 MHz 2 x 15 MHz
Telenor 2 x 11.2 MHz 2 x 15 MHz
2 x 15 MHz
2 x 10 MHz 2 x 11.2 MHz 2 x 5 MHz 2 x 15 MHz
mt:s
Serbia Vip mobile
2 x 9.6 MHz 2 x 20 MHz 2 x 15 MHz
2 x 10 MHz
2 x 4.2 MHz 2 x 30 MHz 2 x 15 MHz
Telenor 2 x 10 MHz 2 x 9.6 MHz 2 x 20 MHz 2 x 15 MHz
2 x 10 MHz 2 x 10 MHz 2 x 25 MHz 2 x 5 MHz 2 x 40 MHz 45 MHz 2 x 75 MHz
m:tel
Montenegro T-Mobile 2 x 10 MHz 2 x 25 MHz
2 x 15 MHz 2 x 20 MHz 2 x 25 MHz
2 x 20 MHz 2 x 20 MHz 2 x 10 MHz 5 MHz
Telenor 2 x 15 MHz 2 x 25 MHz 2 x 20 MHz
410 450 700 800 900 1 800 2 100 2 600 2 600 3 500 3 500 3 700 25
FDD TDD FDD TDD
Source: spectrummonitoring.comwww.ppftelecom.eu
THANK YOU FOR YOUR ATTENTION
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